Chapter 6 Intro to Supply Chain
Firmed Segment
(demand time fence) -from current period to several weeks into future -determined by component and resource lead times and can only be altered by senior management due to impact on profitability
Tentative Segment
(planning time fence) -from end of firmed segment to several weeks into the future -determined by long lead time components, capacity, and demand planning
Operational Planning Cycles
-Long-range -Intermediate - Short-range
Chase Strategy
-adjusts capacity to match demand -firm hires and lays off workers to match demand -finished goods inventory remains constant *works well for make-to-order firms
Challenge of Resources
-balancing capacity vs output requirements -operations managers are continuously involved in balancing capacity and output
Enterprise Resource Planning (ERP)
-business process management software that allows an organization to use a system of integrated applications to manage the business and automate many back office functions related to technology, services, and human resources -al applications work from common database -all areas are updated simultaneously as data is updated -ELIMINATES duplicated data entry and inconsistent info across an organization -now a key enabler to efficient operations, access to critical info, speed and flexibility
Short Range Operational Planning Cycles
-daily, weekly, monthly -Detailed planning process for components and parts to support the planned production schedule -execution
Long Range Operational Planning Cycles
-normally >1 year (TYPICALLY 3-5) -strategic plans (investment in facilities and major equipment) -multi-year business plans
Output from the MRP system
-planned order releases (purchase and produce) -relies on info provided and ignored capacity and shop floor conditions (Utopian plan)
Intermediate Operational Planning Cycles
-quarterly (up to 18 months) -business plans (financial, operational, roadmap) -shows the quantity and timing of end items produced -impacted by lead times
Level Strategy
-relies on a constant output rate while varying inventory and backlog according to fluctuating demand -production = the average of the demand for all periods firm relies on fluctuating goods and backlog to meet demand *works well for make-to-stock firms
Distribution Requirements Planning (DRP)
-ties physical distribution to manufacturing planning and control system by determining the time phased net requirements of the finished goods -ties to the independent demand of the finished good -establish requirements for the distribution network and balances warehouse capacity with production plans
Production (Materials) Planning
APP- aggregate production plan MPS- master production schedule ATP- available-to-promise MRP-material requirements plan
Which of the following is an engineering document that shows an inclusive listing of all the component parts and assemblies making up the final product?
Bill of Materials
Production Strategies
Chase, Level, and Mixed Production Strategy
ERP stands for:
Enterprise Resource Planning
The Chase Production Strategy relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand pattern
False; Level Production Strategy
The Available to Promise calculation determines how much product needs to be produced to promise delivery to a customer
False; MRP
Gross Requirement and Net Requirement
GR- a time-phased requirement prior to netting out on-hand inventory and lead-time NR- the unsatisfied item requirement for a specific time period; gross requirement for period MINUS current on-hand inventory
The Planning Factor is:
Number of components needed to produce a unit of the parent item
Terms used in MRP:
Parent Components Gross Requirement Net Requirement Scheduled Receipt Projected-on-Hand-Inventory Planned Order Releases Time Bucket Explosion Planning Factor Firmed Planned Order Pegging Low-level Coding Lot Size Safety Stock
Parent and Components
Parent- item generating demand for lower-level components Components- parts demanded by parent
Types of Capacity Planning
Resource Requirement Plan (RRP) Rough-cut Capacity Plan (RCCP) Capacity Requirement Plan (CRP)
The medium-range capacity planning technique used to check the feasibility of the Master Production Schedule (MPS) is called:
Rough-cut Capacity Planning (RCCP)
Time Bucket and Explosion
TB- time period used on the MRP (days/weeks) Explosion- process of converting a parent item's planned order releases into component gross requirements
The Resource Requirement Plan is:
The long range capacity plan
Production Capacity
The maximum amount an organization can complete in a given period of time based on the resources available -excess or insufficient capacity prevents firm from taking advantage of the efficiency of manufacturing planning and control system
Capacity
The maximum amount or number that can be received or contained
The Material Requirements Plan is:
The short range production plan
Production Capacity is the maximum amount an organization can complete in a given period of time based on the resources available.
True
The challenge for resource and operations planning professionals is to balance capacity and output.
True
Scheduled Receipt
a committed order awaiting delivery for a specific period
Capacity Requirement Plan (CRP)
a short-range capacity plan that is used to check the feasibility of the material requirements plan -execution decision
System Nervousness
a small change in the upper-level-production plan which causes major changes in the lower-level-production plan
Resource
a source of supply, support, or aid, especially one that can be readily drawn upon when needed
Low-level Coding
assigns the lowest level on the BOM to all common components to avoid duplicate MRP computations
Independent Demand
demand for the final products affected by trends, seasonal patterns, and general market conditions
Bill of Materials
document that shows an inclusive listing of all component parts and assemblies making up the final product
Mixed Production Strategy
maintains table core workforce while using other short-term means, such as overtime, subcontracting and part time helpers to mange short-term demand
Planning Factor
number of components needed to produce a unit of the parent item
Lot Size
order size for MRP logic
Firmed Planned Order
planned order that the MRP computer logistic system cannot automatically change when conditions change
Projected-on-Hand-Inventory
projected closing inventory at the end of period; = (BI - GR) + Scheduled Receipt and any planned receipt from planned order released
Pegging
relates gross requirements for a part to the planned order releases that created the requirement; ties the receipt to committed demand
Multilevel Bill of Materials
shows the parent-component relationships and the specific units of components known as the planning factor
Planned Order Release
specific order to be released to the shop or to the supplier to ensure availability when needed
Available-to-Promise (ATP)
the difference between confirmed customer orders and the quantity the firm planned to produce (amount available to other orders) Need to know: -Beginning Inventory -Production Schedule (firm and tentative) -Confirmed Customer Orders
Dependent Demand
the internal demand for parts based on the demand of the final product in which the parts are used (e.g., subassembly)
Resource Requirement Plan (RRP)
the long-range capacity plan that checks whether aggregate resources are capable of satisfying the aggregate production -strategic decision
Aggregate Production Plan (AAP)
the long-range(strategic decision) plan that translates annual business and marketing plans and demand forecasts into a production plan for a product family (products that share similar characteristics) in a plant of facility -planning horizon of APP is at least one year and is usually rolled froward by 3 months every quarter Sets the production output requirements, workforce needs and inventory plans; enables firm to see its capacity requirements DETERMINES the production strategy the firm will use
Rough-cut Capacity Plan (RCCP)
the medium range capacity plan used to check the feasibility of the Master Production Schedule (MPS) -converts MPS from production needed to capacity required, then compares it to capacity available -tactical decision
Master Production Schedule (MPS)
the medium-range (tactical decision) plan that provides a detailed breakdown of the aggregate production plan, listing the exact end items to be produced by a specific period *MORE detailed than APP and easier to plan under stable demand; breaks down months into weeks/days -planning horizon is shorter than APP, but longer than the lead time to produce the item so product is completed within the plan
Safety Stock
the minimum projected on hand inventory to protect against uncertainties in demand, supply, quality, and lead time
Resource Planning
the process of determining the required resources to effectively and efficiently produce the output required. The aggregation of all resources committed to production (space, equipment, personnel) DETERMINES the capacity to meet demand.
Material Requirement Plan (MRP)
the short-range (execution decision) plan from a computer-based materials management system that calculates the exact quantities. need dates, and planned order released for subassemblies and materials required to manufacture a final product Requires the following info: -the independent demand info -parent-component relationships from the Bill of Materials -inventory status of final product and components -lead time for each component (buy) time required for each process step (make)
Solution to System Nervousness
time-fence system which separates the planning horizon into: Firmed and Tentative Segments
Common component
used in more than one subassembly